The Eastside is a funny place to do business. It’s an amalgamation of huge corporations and small suburban businesses unlike anywhere else in the country. It’s a place making a name for itself regionally — few consider Bellevue just a sleepy suburb anymore — but not nationally; companies headquartered here still label themselves as “Seattle” firms in conversation and online. And its companies are on the forefront of numerous business trends, from automation to aviation to artificial intelligence.
Ask anyone who’s been here a decade or longer, and they’ll tell you the Eastside is changing quickly. With that change, much of it for the better, comes tension, and it’s that tug-of-war — between profits and ethics, fast and measurable growth, luxury and affordability — that made 2015 such a compelling year here. The stories of the Eastside are ones of companies, people, and cities trying to define themselves in a changing business landscape.
Below are the topics I found most significant this year, and underlying each is some form of tension the subject is dealing with. Can an enormous company like Microsoft shed its stodgy reputation while remaining immensely profitable and reliable? Can fast-growth tech firms make themselves more inclusive places to work while trying to hire as quickly as possible? Can the Eastside embrace China in a fashion that doesn’t make it overly reliant on a not-so-trustworthy ally? Last year hinted at the answers to these questions, and the Eastside’s identity, changing with every skyscraper, hangs on the outcome.
BREAKING: Microsoft is exciting again
Satya Nadella was hired in 2014 to replace Steve Ballmer, and quickly set out to change the culture of Ballmer’s behemoth. Memo after memo made clear Microsoft was ditching the emphasis on Windows and devices in favor of connected computing and the cloud. But the Nadella Epoch truly began in February of this year, when Microsoft, ironically, unveiled a new version of Windows (10) and a new device (HoloLens). The significance? As a New Yorker headline put it, Microsoft finally did something interesting.
Some portray Nadella as a savior rescuing a foundering company, but that’s not the case. Share prices didn’t skyrocket under Ballmer (remember, share prices are subjective measures affected by, you guessed it, excitement), but he grew revenue from $25 billion in 2000 to $70 billion, giving Nadella the capital to develop devices like HoloLens and expand cloud infrastructure. Microsoft wasn’t going to stop making money under Ballmer, but it probably wasn’t going to become exciting, either.
So in stepped Nadella, who spent 2015 getting people stoked on Microsoft with Windows 10, HoloLens, and more cloud services. To understand the significance of this, consider a scenario in which all three of the aforementioned projects, the highlights of Nadella’s strategy, fail to achieve their goals.
Windows 10, at worst, places Microsoft in a unique position of having one operating system that spans desktop computers, smartphones, and a game console (a very underrated element of Windows 10). Azure must make incredible headway to surpass Amazon Web Services, but the combination of Azure with Microsoft’s cloud apps is enticing, and it signals Microsoft’s huge stake in the future of computing. HoloLens is a risky, speculative bet on leapfrogging virtual reality headsets and diving into augmented reality, but it sends the clear message that Microsoft is willing to gamble on forward-thinking tech and will give its employees the chance to build new stuff.
Good luck buying a house
Buying a house on the Eastside was a ridiculously expensive endeavor in 2014. And 2013. As for 2015, Redfin reports that five Eastside burgs — three in Redmond, two in Bellevue — were among the 30 most competitive real estate markets in the country. Overlake clocked in at No. 2, just behind a Cambridge, Massachusetts neighborhood, near Harvard University.
The reasons for the home-price surge (Do. Not. Say. Bubble.) are numerous. There’s a shortage of housing at both ends of the economic spectrum. Wealthy buyers, many from China, are inflating values with cash offers. And, like the San Francisco Bay Area, our region has a slew of high-paying jobs, rapid population growth, and geographic constraints on where we can put homes (damn those mountains and lakes).
If trends continue, 2016 could be a watershed year in housing. Will prices continue their steady climb, or will there be a hiccup? Where will affordable housing spring up, and in what volume? And what will be the effects in the exurbs? Another influence could be more global — if China’s economic growth continues to slow, that could affect foreign buyers.
So long, Expedia
2015 was a big year on the commercial real estate front, too — you may have noticed some new skyscrapers in downtown Bellevue — but the biggest story of the year was a downer: Expedia’s impending exit from downtown Bellevue. The homegrown company made waves with its 2007 move to downtown, solidifying Bellevue as more than just a Seattle suburb. But now that the company has grown, it wants an “iconic waterfront campus,” as CEO Dara Khosrowshahi said many times, in Seattle.
By the time the company starts moving operations, in 2019, Expedia will shift about 3,000 employees away from 500,000 square feet of office space. That maw could affect demand at new projects from developers such as Kemper Development and Schnitzer West, which are erecting new towers downtown. Expedia’s move might send an unwelcome signal that, once a company grows large enough, it has to go to Seattle to attract the most talent (though Concur, Paccar, and Microsoft all suggest otherwise).
Xi comes to town
One of the biggest stories — and traffic nightmares — of the year was the visit of China President Xi Jinping to the area, much of which took place on the Eastside. During a trip when he met with Seattle’s and Silicon Valley’s tech stalwarts, Xi addressed cybersecurity, saying China and the U.S. shouldn’t hack each other but that China’s not going to open up its Web as U.S. companies would like.
Xi’s visit proved fruitful for plenty of Eastside establishments. TerraPower, the Bill Gates-backed nuclear company, secured an important partnership with China’s state-run nuclear firm (Gates was tickled). Boeing announced 300 jet orders from Chinese customers and, much to the chagrin of Machinists in Renton, a new 737 completion center in that country.
The Global Innovation Exchange, a joint graduate program of the University of Washington and China’s Tsinghua University, also received a boost. The universities and their representative states (Washington and Sichuan province, in China) agreed to prioritize urban planning that promotes clean energy.
GIX was big news in itself, as it further solidifies the Eastside’s link to China and offers one more tech-focused school for a region in dire need of tech workers. The program will take an entrepreneurial approach to education, something partnering organizations like Microsoft (which chipped in $40 million in initial funding) will surely appreciate.
Diversity on everybody’s wish list
The treatment of racial minorities and women in the tech sector began garnering headlines in 2014, when Google first announced its employee demographics. But 2015 proved to be the year companies, it seemed, actually began doing something about it.
Many tech firms, including Adobe, Netflix, and Microsoft, made significant boosts to their parental leave policies. Across the Eastside, firms are promoting inclusivity and diversity by implementing classes on biases and bankrolling educational programs that target minorities and women.
But it wasn’t all rosy news on the diversity front. Microsoft is battling a class-action suit that alleges its employee-evaluation system, among other elements of its company culture, is biased against women.
The diversity discourse also needs to become more inclusive. Most ink and study dollars have been devoted to gender discrimination; race and ethnicity are harder to define, and transgender rights are a far more nascent discussion. Age diversity and neurodiversity have received even less attention. The discussion also shouldn’t stop with tech. Finance, law, and media are other industries dominated primarily by white and male employees, yet Goldman Sachs and Conde Nast receive far less diversity criticism than does Microsoft.
These weren’t just the biggest stories of 2015 — they’re also the ones that will continue to evolve and shape what business on the Eastside is like in 2016 and beyond. Keep an eye on Microsoft, China, and the diversity in your office, as they are bellwethers signaling what’s next for the Eastside.